Dec. 23, 2008

Gov. David Paterson presents his 2009-2010 state budget at the Empire State Convention Center in Albany Dec. 16. / AP Photo

Written by

Laurie Nikolski

Sales of non-diet sodas, cigarettes and cigars could be subject to increased and new taxes and fees under the proposed budget. Items pictured are sold at Steger's Paper Mill in Katonah. / Angela Gaul/The Journal News

More

ADVERTISEMENT

When Gov. David Paterson last week released his grim road map for rectifying New York's $15.4 billion deficit, he did so with a forceful and mostly somber exposition of the problem. He coupled this earnestness with just a bit of his trademark humor. In the end, he still angered just about everyone. As it turns out, Paterson even counted himself among the miffed.

Paterson's $121 billion spending plan calls for almost flat spending growth next year, with schools and health care each taking financial hits. Deep cuts in spending would follow after that. Thousands of state jobs would be eliminated, including 520 via layoffs. Paterson proposed a multitude of new or increased taxes and fees, reaching virtually every facet of New York life.

Acknowledging that his plan was "not perfect,'' Paterson asked that the "endless ridicule'' that greets such harsh news be replaced with "purposeful'' alternatives. "Tell us how,'' he told the lawmakers and others gathered in Albany, how else to avoid economic collapse. His blueprint comes as the state grapples with a revenue loss of some $6.5 billion, much of it linked to Wall Street's collapse. Economic turmoil has cost New York 225,000 jobs statewide, including 60,000 on Wall Street alone. Unemployment is expected to top 7 percent in the new year.

What 'shared sacrifice'?

Anger and ridicule came swiftly, as various players in the debate sought to define what "shared sacrifice'' should mean. Labor organizations and education advocates want the governor to increase income taxes on the wealthy. While not ruling that out, Paterson has said that raising taxes on the wealthy would simply drive even more people out of the state. Conservative analysts agree. They see the problem as spending too much, not taxing too little.

E.J. McMahon, director of the Manhattan Institute's Empire Center for New York State Policy, told Joseph Spector of our Albany bureau that Paterson must take on the unions, seeking, for example, to reopen existing contracts, get more concessions and use the threat of broader layoffs as a "hammer." This same strategy has already been deployed in Yonkers, with some success.

Wealthy New Yorkers, by the way, do get hit under the governor's plan, through which he hopes to raise $120 million, by limiting millionaires' deductions on state tax returns and imposing new taxes on high-end luxury items. Look for the public-employee unions to push harder for soak-the-rich policies; union-backed TV spots already are in circulation touting such strategies. The contentiousness will continue between now and April 1, when the Legislature is required to pass a spending plan. Paterson released his proposal a month earlier because he wants the 2009-10 budget in place by March 1, saving the state about $1.3 billion if accepted as he proposed.

Yet even he is uncomfortable with the spectre of how much he is asking of New Yorkers. "I can't believe that I became governor, and I'm cutting education like this," about 3 percent statewide, Paterson said in a New York City radio interview Friday. Yet there is a dearth of "purposeful'' alternatives so far. And much carping.

Political considerations

The currently Republican-led Senate was cool to Paterson's ideas, particularly on taxes. Said current Senate Majority Leader Dean Skelos, R-Nassau County: "My hope is we'll be able to eliminate a number of these fees and taxes that the governor has proposed." Meanwhile, even if Democrats, who technically won the Senate in the November election, can stop squabbling and get together behind a new Democratic leader, there are great divides among them on how to proceed.

Assembly Speaker Sheldon Silver, a Democrat like the governor, was more supportive of Paterson's goals, but said: "We will insist that this government be deliberate and thoughtful about cuts and not walk away from New York's historic obligation to the education, safety and health of our citizens.'' No word, mind you, of any immediate gesture from leaders that they, too, take the "sacrifice'' mantra seriously, by volunteering, for example, to cut the Legislature's own proposed budget of $221 million.

Cries among those targeted for the largest cuts are predictably loud. Medicaid insurance for the poor and public education comprise the largest chunk of the state budget, and Paterson's cuts would hit them hard. The health-care sector and advocates for schools insist that they can least afford state-aid reductions. Friday, William Van Slyke, a spokesman for the Healthcare Association of New York State, expressed hope that a federal bailout could produce an additional $3 billion to $4 billion in Medicaid reimbursements to New York. Others doubt any bailout money will come in time.

Doomsday predictions

The health association released a report Monday, in which Daniel Sisto, its president said: "These cuts are astronomical and incredibly damaging to the health and well-being of every New Yorker. Most hospitals are already reporting huge losses due to current artificially low reimbursement levels and the impact of the national recession. As a result, most hospitals have already planned to freeze or reduce services and staff. Moreover, health-care providers have already been cut twice this year, for a total of more than $1 billion, weakening them further still.

"If the governor's new round of cuts is realized, hospitals will have no choice but to eliminate critically important services to protect their core functions," Sisto said. (A hospital-by-hospital breakdown of the proposed Paterson cuts is available at the group's Web site: www.hanys.org/news/index.cfm?storyid=698)

Meanwhile, several education advocacy groups together called the executive budget proposal "unfair and unreasonable.'' School advocates warn that documented educational gains, especially in urban areas the last two decades, will be lost. They predict as well that the Paterson cuts will force local school board to either raise property taxes or make corresponding cuts, resulting in layoffs, larger class sizes, and fewer extra-curricular activities.

"These are going to be very difficult times, some of the most difficult I've seen in my time in education,'' Mahopac schools Superintendent Robert Reidy, a schools superintendent for 31 years, said Dec. 16, the day Paterson released his budget. Reidy estimated that the proposed cut in state aid would translate into roughly a 1.5 percent tax-rate increase for his district, if a budget similar to the current one goes to voters in the next school year. Altogether, Lower Hudson Valley schools stand to lose $54 million in aid under the plan.

"The governor has shifted the unbearable burden of closing the budget gap onto the shoulders of school children while sparing the wealthiest New Yorkers,'' said Billy Easton, executive director of the Alliance for Quality Education advocacy group, after seeing the governor's budget plan. "Asking school children to sacrifice $2.5 billion in school funding to pay for the state's deficit problems while requiring nothing from New York's highest income earners is irresponsible.''

Lots of increases

Paterson's budget squeezes more than public employees and school kids. The poor and middle class would be hammered with some 180 new or inreases taxes and fees. New Yorkers would pay more with taxes on clothes and shoes, haircuts, movie tickets, cable TV, soda, and a host of other products and activities, costing taxpayers more than $4 billion a year. Then there are proposed additional levies on beer, health insurance, vehicle registrations and driver's licenses, rental cars and use of state parks.

"This is not shared sacrifice,'' Dan Cantor of the Working Families Party said. "The governor proposes to balance the budget in an imbalanced way: by raising taxes on the middle class while simultaneously reducing the services we all rely on.''

Ron Deutsch of New Yorkers for Fiscal Fairness said the cuts amount to "spared sacrifice,'' leaving the wealthy relatively untouched.

Then there's a huge utility tax to raise $651.6 million - what Patrick Curran of the state Energy Association, a utility trade group, called "maybe the most regressive form of taxation. You have to have heat. You have to have electricity.''

Yet the governor insists he, and the state, are hamstrung, warning Friday: "This is a very, very difficult year for Americans. But I don't think it has been fully realized . . . it could theoretically become another depression, it is that difficult."

Lawmakers should savor the holidays, for come January, it will be the Legislature's turn to craft a plan with a purpose.

The writer is an associate editor on the Editorial Board of The Journal News and LoHud.com. She can be reached at: lnikolsk@lohud.com